By Sam Boughedda
Adidas AG (OTC:ADDYY) published its guidance for 2023 on Thursday, stating that it has accounted for a "significant adverse impact" from not selling its existing Yeezy stock.
"While the company continues to review future options for the utilization of its Yeezy inventory, this guidance already accounts for the significant adverse impact from not selling the existing stock," the company said in a statement.
Last year, Adidas (OTC:ADDYY) ended its partnership with Ye, formerly known as Kanye West, following comments by the designer and rapper that caused an uproar.
Adidas said today that the significant impact of not selling the existing Yeezy stock would lower revenues by around €1.2 billion (€1 = $1.0743) and operating profit by approximately €500 million this year.
As a result, if Adidas decides not to repurpose any of the existing Yeezy products going forward, it expects currency-neutral sales to decline at a high-single-digit rate in 2023, with underlying operating profit projected to be around the break-even level.
Furthermore, the sportswear giant expects one-off costs of up to €200 million in 2023 as part of a strategic review it is currently conducting aimed at reigniting profitable growth as of 2024.
If all these effects materialize, Adidas expects to report an operating loss of €700 million in 2023.
"The numbers speak for themselves. We are currently not performing the way we should," said Adidas CEO Bjørn Gulden. "2023 will be a year of transition to set the base to again be a growing and profitable company."